Recession continues, costs state government another $28 million

(Host)
The economy has yet to reach bottom. Unemployment will continue to rise and
state revenues are shrinking drastically.

That
was the bleak news delivered by a pair of economists on Thursday. As a result, legislative leaders agreed to lower their budget estimates for
next year.

VPR's
John Dillon reports:

(Dillon)
Legislative economist Tom Kavet said the current recession is unprecedented for
its length and depth. One stunning
statistic is that in just 19 months, the country lost 6.5 million jobs.

(Kavet) "That's entirely wiped out nine
years of job growth. So from the time this expansion started to now, we're at
zero. That's never happened before since the Great Depression."

(Dillon)
Kavet and state economist Jeff Carr say state revenues will be down $28 million
this fiscal year, and $23 million next year.

The
reason is that the economy has yet to recover. And all the major revenue
sources - such as income, sales and rooms and meal taxes - are declining. Jeff
Carr:

(Carr) "This is a whole other order of
magnitude in terms of what's happening to the economy. And that in turn is
creating a whole other order of magnitude in what's happening with revenues.
We've never seen year to year, back to back declines in our major income and
consumption taxes like we're experiencing now."

(Dillon)
Governor Douglas said the revenue forecast makes an already difficult budget
process much worse. He said the state may need to cut its work force through
additional layoffs.

(Douglas) "The
projected shortfall for 2011 was $67 million. What we heard today was that it
was $23 million more than that. So it's $90 million now for 2011. Added with what
we're looking at for fiscal '10 and '12, we're looking at a quarter of a billion dollar problem
for these three years."

(Dillon)
The latest fiscal problems follow a contentious legislative budget debate.
Lawmakers overrode the governor's veto to pass their own spending plan that
included new revenue.

Senate
President Peter Shumlin and other Democratic leaders asked the governor to set
aside that dispute and work with them on next year's budget.

(Shumlin) "I think that what we have to
continue to do is reach our hand out to the governor and tell him that in
fiscal crisis unprecedented for Vermonters when they're feeling so much pain
it's time to move on from the battles of the past and work together in the best
interests of Vermonters."

(Dillon)
Douglas promised to work with Democrats. But he didn't seem
ready to forget the bruising budget debate.

(Douglas) "We have to
move forward. But the questions that have been presented to me are in the
context of, ‘Gosh, let's forget all that and have a Kumbaya moment and work
together on a process that we can all agree to.' And I need to have some level
of confidence that's possible, based on my experiences of the last year. And
I'm not certain of that."

(Dillon)
Both sides agree that the state faces unparalleled budget problems. It was
summed up in one fact provided by economists. The state will have less money to
spend this year than it had five years ago.